HSBC Announces Tender Offer For Notes Issued By Swiss Re Capital I LP And Guaranteed By Swiss Reinsurance Company Ltd

ZURICH, March 18, 2015 /PRNewswire/ -- HSBC Bank plc ("HSBC") today announces that it is inviting holders of the outstanding 6.854% Perpetual Subordinated Step-Up Preferred Securities (liquidation preference $1,000 per Preferred Security) (Rule 144A CUSIP / ISIN / Common Code: 87089AAA6 / US87089AAA60 / 025409060; Regulation S CUSIP / ISIN / Common Code: G86303AA5 / USG86303AA52 / 025409086) (the "Preferred Securities"), issued by Swiss Re Capital I LP (the "Issuer") and guaranteed on a subordinated basis by Swiss Reinsurance Company Ltd ("Swiss Re") to offer to sell to HSBC for cash Preferred Securities at the price specified below (the "Offer").

The Offer is being made upon the terms and subject to the conditions contained in the offer to purchase dated March 18, 2015 (the "Offer to Purchase").  Capitalised terms used and not defined have the meanings set forth in the Offer to Purchase.

HSBC offers to purchase for cash the maximum aggregate liquidation preference of Preferred Securities that it can purchase for the Maximum USD Payment Amount (as defined below) from registered holders of the Preferred Securities.

The table below sets forth the key terms of the Offer:

Offer Period

The Offer will expire at 5:00 p.m., New York City time, on April 15, 2015, unless extended or earlier terminated by HSBC in its sole discretion (such time, as the same may be extended or earlier terminated, the "Expiration Time").  The right to receive the early tender consideration and the right to withdraw tendered preferred securities will expire at 5:00 p.m., New York City time, on March 31, 2015 (the "Early Tender Deadline"), unless extended by HSBC.  

Holders must tender their Notes in accordance with the procedures specified in the Offer to Purchase.

THE DEADLINES SET BY ANY INTERMEDIARY OR CLEARING SYSTEM WILL BE EARLIER THAN THESE DEADLINES.

Tender Consideration and Total Consideration

Holders of Preferred Securities subject to the Offer must validly tender and not validly withdraw their Preferred Securities at or prior to the Expiration Time to be eligible to receive the Tender Consideration. Holders of Preferred Securities subject to the Offer must validly tender and not validly withdraw the Preferred Securities at or prior to the Early Tender Deadline to be eligible to receive the Total Consideration. If Holders validly tender Preferred Securities after the Early Tender Deadline, but prior to the Expiration Time, such Holders will be eligible to receive the Tender Consideration only. Preferred Securities may be withdrawn at any time at or prior to the Withdrawal Time. Acceptance of tendered Preferred Securities, and therefore, eligibility to receive the Tender Consideration or the Total Consideration, as the case may be, will be subject to Participation Priorities (referred to below).  The consideration will be as follows:

• The "Tender Consideration" for each $1,000 liquidation preference of Preferred Securities validly tendered and accepted for purchase pursuant to the Offer will be $1,017.50.
• The "Early Tender Consideration" for each $1,000 liquidation preference of Preferred Securities validly tendered prior to the Early Tender Deadline, and not validly withdrawn, and accepted for purchase pursuant to the Offer will be $50.00.
• The "Total Consideration" for each $1,000 liquidation preference of Preferred Securities validly tendered prior to the Early Tendered Deadline, and not validly withdrawn, and accepted for purchase pursuant to the Offer will be the sum of the Early Tender Consideration and the Tender Consideration.

Holders will also receive with respect to any Preferred Securities validly tendered and accepted for purchase in the Offer accumulated distributions on such Preferred Securities from, and including, the last distribution date applicable to the Preferred Securities to, but not including, the Final Settlement Date or the Early Settlement Date, as applicable, rounded to the nearest $0.01 ("Accumulated Distributions"). 

Offers and Participation Priorities

The Offer forms part of a series of transactions, including various other concurrent tender offers (collectively with the Offer, the "Offers"), in which Swiss Re seeks to exchange with HSBC outstanding indebtedness, including subordinated notes that represent substantially all of the assets of the Issuer, for new euro-denominated Perpetual Subordinated Fixed-to-Floating Rate Callable Loan Notes to be issued by Swiss Re (the "New Loan Notes"). The exchange will be made pursuant to an exchange settlement agreement (the "Exchange Settlement Agreement"). The New Loan Notes are to be acquired by a vehicle against the issuance of Perpetual Fixed-to-Floating Rate Loan Notes, which will be sold pursuant to a subscription agreement (the "Subscription Agreement"). The total amount available to purchase Preferred Securities in the Offer and the Notes described below in the other Offers is €750,000,000 (the "Initial Available Payment Amount").  HSBC is undertaking the following tender offers concurrent with the Offer: 

• an offer to purchase (the "Concurrent Euro Tender Offer") up to the Initial Available Payment Amount of the €1,000,000,000 5.252% perpetual step-up notes of ELM B.V. (the "Euro Notes"). For purposes of the Offer, the "Maximum USD Payment Amount" is contingent on the results of the Concurrent Euro Tender Offer, and will be equal to the U.S. Dollar Equivalent of the excess of the Initial Available Payment Amount over the amount payable to settle the Concurrent Euro Tender Offer (excluding accrued interest on the Euro Notes and Accumulated Distributions (as defined below)) (the "Euro Payable Amount").
• an offer to purchase (the "Concurrent Australian Dollar Tender Offer" and together with the Concurrent Euro Tender Offer, the "Concurrent Tender Offers") (i) AUD 300,000,000 7.635% Perpetual Step-Up Notes (the "AUD Fixed Rate Notes") and (ii) AUD 450,000,000 Floating Rate Perpetual Step-Up Notes (the "AUD Floating Rate Notes" and, together with the AUD Fixed Rate Notes, the "AUD Securities"), and the amount available therefor being the Australian Dollar Equivalent of the excess of the Initial Available Payment Amount over the (i) Euro Payable Amount, plus (ii) the amount in euro equal to the USD Aggregate Total Consideration (as defined below) (the "AUD Payable Amount").

The expiration date for the Concurrent Euro Tender Offer and the Concurrent Australian Dollar Tender Offer is the same as the Early Tender Deadline, unless any or all are extended or earlier terminated.

The Offer is not conditioned upon any minimum amount of Preferred Securities being tendered, though it is conditioned on (i) the execution of the Exchange Settlement Agreement and the Subscription Agreement and (ii) the Euro Payable Amount being less than the Initial Available Payment Amount.  The Offer is also not conditioned on the settlement of the Concurrent Australian Dollar Tender Offer.  The Offer may otherwise be amended, extended or terminated in the sole discretion of HSBC.  

The following table sets forth the priorities applicable to the Offer and the Concurrent Tender Offers (the "Participation Priorities"):

The Maximum USD Payment Amount

The Maximum USD Payment Amount for the Offer will depend on the aggregate principal amount of the Euro Notes purchased pursuant to the Concurrent Euro Tender Offer. Following the Early Tender Deadline, if the USD Aggregate Total Consideration as determined as of the Early Tender Deadline is less than the Maximum USD Payment Amount, the Maximum USD Payment Amount at the Expiration Time could be lower, and could be zero, in each case depending on the level of acceptances in the Concurrent Australian Dollar Tender Offer.

Tendered Preferred Securities may be subject to proration as described in the Offer to Purchase. Preferred Securities validly tendered at or prior to the Early Tender Deadline will be accepted for purchase in priority to Preferred Securities tendered after the Early Tender Deadline. The Preferred Securities, if any, will be accepted for purchase as follows: 

As of the Early Tender Deadline

(1) If the aggregate liquidation preference of Preferred Securities validly tendered for purchase at or prior to the Early Tender Deadline (excluding Accumulated Distributions) is less than the aggregate liquidation preference of Preferred Securities that could be purchased with the Maximum USD Payment Amount, all such Preferred Securities will be accepted for purchase as of the Early Tender Deadline (the consideration payable therefor, excluding Accrued Distributions being referred to as the "USD Aggregate Total Consideration"). In this case, HSBC will also accept for purchase any AUD Securities validly tendered in the Concurrent Australian Dollar Tender Offer up to the Australian Dollar Equivalent of the excess of the Initial Available Payment Amount over (i) the Euro Payable Amount, plus (ii) an amount in euro equal to the USD Aggregate Total Consideration (in each case, without giving effect to accrued interest).

(2) If the aggregate liquidation preference of Preferred Securities validly tendered for purchase at or prior to the Early Tender Deadline exceeds the aggregate liquidation preference of Preferred Securities that could be purchased with the Maximum USD Payment Amount, Preferred Securities tendered at or prior to the Early Tender Deadline will be accepted for purchase as of the Early Tender Deadline, subject to proration in respect of all such Preferred Securities, and Preferred Securities tendered after the Early Tender Deadline will not be accepted for purchase. In this case, the Concurrent Australian Dollar Tender Offer will be terminated and no AUD Securities will be accepted for purchase by HSBC.

As of the Expiration Time

(3) If the aggregate liquidation preference of Preferred Securities validly tendered for purchase at or prior to the Early Tender Deadline is less than the aggregate liquidation preference of Preferred Securities that could be purchased with the Maximum USD Payment Amount, any Preferred Securities validly tendered for purchase after the Early Tender Deadline and before the Expiration Time will be accepted for purchase as of the Expiration Time, provided, however, that if the total aggregate liquidation preference of Preferred Securities validly tendered for purchase prior to the Expiration Time exceeds the aggregate liquidation preference of the Preferred Securities that could be purchased with the "Remaining Payment Amount" (being the U.S. Dollar Equivalent of the excess of the AUD Payable Amount over the amount payable for the AUD Fixed Rate Notes and AUD Floating Rate Notes accepted for purchase in the Concurrent Australian Dollar Tender Offer) (in each case, without giving effect to accrued interest), proration will be applied to the Preferred Securities validly tendered for purchase after the Early Tender Deadline and prior to the Expiration Time.  Preferred Securities will not be accepted for purchase at the Expiration Time if the Remaining Payment Amount is zero (in this case, by reason of the level of acceptances in the Concurrent Australian Dollar Tender Offer).

HSBC reserves the right, but is under no obligation, to increase or decrease the Maximum USD Payment Amount, subject to compliance with applicable law, which could result in HSBC purchasing a greater or a lesser liquidation preference of the Preferred Securities in the Offer.

Payment

Payment for the Preferred Securities purchased in the Offer will be made promptly after the Expiration Time, currently anticipated to be 5:00 p.m., New York City time, on April 15, 2015, if the Offer is not extended or earlier terminated by HSBC in its sole discretion (the "Final Settlement Date").  However, HSBC reserves the right but is under no obligation, at any point following the Early Tender Deadline and before the Expiration Time, to accept for purchase any Preferred Securities validly tendered at or prior to the Early Tender Deadline (the "Early Settlement Date").  The Early Settlement Date will be determined at HSBC's option and is currently expected to occur on a business day selected by HSBC following the Early Tender Deadline, and is currently expected to be on April 1, 2015, subject to all conditions to the Offer having been satisfied or waived by HSBC.  Irrespective of whether HSBC chooses to exercise its option to have an Early Settlement Date, HSBC will purchase any remaining Preferred Securities that have been validly tendered by the Expiration Time and that HSBC chooses to accept for purchase, subject to the Maximum USD Payment Amount and all conditions to the Offer having been satisfied or waived.

Payment of Preferred Securities accepted for purchase in the Offer will be made by deposit of immediately available funds by HSBC on the Final Settlement Date, or Early Settlement Date, if applicable, with The Depository Trust Company ("DTC"). 

Preferred Securities not accepted for purchase will be returned to the respective Holders as soon as possible after the Settlement Date.

Expected Transaction Timeline

Further Information

A complete description of the terms and conditions of the Offer is set out in the Offer to Purchase.  Merrill Lynch, Pierce, Fenner & Smith Incorporated, Commerzbank Aktiengesellschaft, Deutsche Bank, HSBC Bank Plc. and UBS Limited are the Dealer Managers for the Offer. Any questions or requests for assistance may be directed to the Dealer Managers:

Requests for information in relation to the procedures for tendering the Preferred Securities should be directed to:

TENDER AND INFORMATION AGENT
Lucid Issuer Services Limited
Leroy House
436 Essex Road
London N1 3QP
United Kingdom
Telephone: +44 20 7704 0880
Attention: David Shilson/Sunjeeve Patel
Email: [email protected]

A copy of the Offer to Purchase is available to eligible persons upon request from the Tender and Information Agent.

The Dealer Managers do not take responsibility for the contents of this announcement. The Issuer is aware of, and has no objection to, HSBC making the Offer.

NONE OF HSBC, THE TENDER AND INFORMATION AGENT, THE DEALER MANAGERS, SWISS RE, THE ISSUER OR ANY OF THEIR RESPECTIVE AFFILIATES MAKES ANY RECOMMENDATION AS TO WHETHER HOLDERS SHOULD TENDER, OR REFRAIN FROM TENDERING, ALL OR ANY PORTION OF THE AGGREGATE LIQUIDATION PREFERENCE OF THEIR PREFERRED SECURITIES PURSUANT TO THE OFFER, AND NO ONE HAS BEEN AUTHORIZED BY ANY OF THEM TO MAKE SUCH A RECOMMENDATION.  HOLDERS MUST MAKE THEIR OWN DECISIONS AS TO WHETHER TO TENDER PREFERRED SECURITIES, AND, IF SO, THE AMOUNT OF PREFERRED SECURITIES TO TENDER.

THIS ANNNOUNCEMENT AND THE OFFER TO PURCHASE SHOULD BE READ CAREFULLY BEFORE A DECISION IS MADE WITH RESPECT TO THE OFFER.  IF ANY HOLDER IS IN ANY DOUBT AS TO THE CONTENTS OF THE ANNOUNCEMENT OR THE OFFER TO PURCHASE OR THE ACTION IT SHOULD TAKE, IT IS RECOMMENDED TO SEEK ITS OWN FINANCIAL AND LEGAL ADVICE, INCLUDING IN RESPECT OF ANY TAX CONSEQUENCES, IMMEDIATELY FROM ITS BROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL OR LEGAL ADVISER.

SOURCE Swiss Re Capital I LP